GoJIL Vol. 6, No. 1 (2014)
The Least-Developed Countries Services Waiver: Any Alternative Under the GATS?
Claudia Manrique Carpio & Jaume Comas Mir
Abstract
Despite the fact that least-developed countries (LDCs) constitute approximately 12 percent of the world’s population, they account for 0.5 percent of the world’s trade in commercial services.[1] LDCs have important disadvantages that prevent them from acquiring an adequate share of benefits from liberalization of trade in services. In this context, the suitability of the special and differential treatment provisions of the General Agreement on Trade in Services (GATS) for the LDCs’ needs and of the flexibility of GATS architecture has been questioned. Article IV:3 of the GATS gives a mandate to negotiate mechanisms that could increase the participation of LDCs in the multilateral trade system. After more than ten years of negotiations, finally in December 2011, the Ministerial Conference of the World Trade Organization (WTO) approved a services waiver decision that allows developed and developing countries to depart from the most favored nation principle in order to grant preferential treatment for LDCs’ services and service suppliers. Therefore, this article first examines the legal scope of the LDCs services waiver, including the background of the waiver, the preferences covered, and the main conditions applying to these preferences. Then, the viability of the waiver’s implementation as a useful tool to boost LDCs’ participation in trade in services and engagement within the GATS is analyzed. The authors also examine whether the waiver has failed to fulfill its mains objectives, whether other alternatives exist. In this contribution the authors argue that the waiver might not have a strong incidence, because of the following regulatory concerns: Firstly, neither a binding obligation is imposed on developed and developing countries to grant preferential treatment in market access, nor any right to perceive preferential treatment is assured to LDCs. As the services waiver is primarily focused on voluntary market access preferences, LDCs’ services suppliers may not find enough legal certainty regarding a preferential treatment, as it might be withdrawn at any time. Secondly, the discipline which allows other discriminatory measures in favor of LDCs is even weaker as it needs approval by the Council on Trade in Services. It therefore should be reinforced and clarified. Thirdly, the difficulty of interpreting ‘rules of origin’ and the consequences of its ambiguous definition need to be overcome. Finally, it is also relevant to consider the differences between the preferential treatment process of concessions to LDCs and the general multilateral negotiation process for trade in services in the WTO that should be considered by members to grant preferences. Nevertheless, alternatives to enhance LDCs’ integration within the GATS could exist, although lack of political willingness may affect the outcome. Two options have been identified. Firstly, market access negotiations in modes of supply of export interest to LDCs should be linked with those attractive to non- LDCs. Secondly, good regulation and regulatory cooperation are essential to overcome non-market access barriers, while disciplines on domestic regulation and extension of mutual recognition agreements to LDCs should be reinforced, essentially building solid institutional mechanisms. Consequently, the ‘aid for trade’ shall be driven to implement LDCs’ domestic regulatory reforms.
[1] See, with reference to 2011, United Nations Conference on Trade and Development (UNCTAD), The Least Developed Countries Report 2013: Growth With Employment for Inclusive and Sustainable Development (2013), 28; WTO, Market Access for Products and Services of Export Interest to Least-Developed Countries: Note by the Secretariat, WTO Doc WT/COMTD/LDC/W/56/Rev.1, 31 October 2012, 23 & 40, paras 58 & 86. In 2012, the share of LDCs in world exports of commercial services increased insignificantly to 0.6 percent. See WTO, Market Access for Products and Services of Export Interest to Least- Developed Countries: Note by the Secretariat, WTO Doc WT/COMTD/LDC/W/58, 10 September 2013, 22, para. 2.48.
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